Mortgage question

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R

Reasonable Doubt

Senior member
Nov 18, 2009
698
2
81
If I buy a house without putting any money down can I later put money on the principle to lower my monthly mortgage payment?
 
MiniDoom

MiniDoom

Diamond Member
Jan 5, 2004
5,305
0
71
not without refinancing, i believe. You can pay extra on the principle but that won't lower your monthly payment.
 
M

msw1382

Member
Feb 25, 2008
136
0
76
to further elaborate, you can put money on the principle but it will not lower your payment. As was said, you would need to refinance for that.
 
rudder

rudder

Lifer
Nov 9, 2000
19,441
86
91
You can pay off your house quicker that way... but mortgage payments will pretty much stay the same.
 
sdifox

sdifox

No Lifer
Sep 30, 2005
97,379
16,412
126
depends on the product you get. Some allow x percent of principal to be paid as lump sum on anniversary. However, this is probably not offered on no money down products.

No money down is the dumbest thing you can do, you are going to pay default insurance n top of a shitty rate.
 
R

Reasonable Doubt

Senior member
Nov 18, 2009
698
2
81
sdifox said:
depends on the product you get. Some allow x percent of principal to be paid as lump sum on anniversary. However, this is probably not offered on no money down products.

No money down is the dumbest thing you can do, you are going to pay default insurance n top of a shitty rate.
Click to expand...

Not for a VA loan.
 
purbeast0

purbeast0

No Lifer
Sep 13, 2001
53,165
6,038
126
Wreckem said:
People on this board will always say if you cannot put 20% down you cannot afford a house. They are wrong.

VA loans are great for those that qualify. So are the 0 down USDA loans.
Click to expand...

yeah, we put 5% down (21K) on our house and can afford it just fine.

also, we have a 30yr fixed conventional loan and don't pay a dime of mortgage insurance.
 
sdifox

sdifox

No Lifer
Sep 30, 2005
97,379
16,412
126
Wreckem said:
People on this board will always say if you cannot put 20% down you cannot afford a house. They are wrong.

VA loans are great for those that qualify. So are the 0 down USDA loans.
Click to expand...

Well, nothing like uncle sam undrewriting your mortgage.
 
HardcoreRobot

HardcoreRobot

Lifer
Nov 7, 2000
16,403
3
81
you can pay down the principle but it wont change your monthly payment, you will just pay off the loan faster. it also adjusts the amortization schedule so you will pay less interest over time as well.

if you want to change the payment you will need to refinance
 
Thump553

Thump553

Lifer
Jun 2, 2000
12,822
2,609
136
It's principal NOT principle (look up the definitions-it should be obvious to anyone that principles have nothing to do with the world of finance.

Putting any extra money down will be a prepayment of principal (IF the lender applies the money correctly-make sure they do and don't just dump it in your escrow account). It won't reduce your monthly payment but it will shorten up the length of the loan. I don't think that's a dumb idea and personally I favor 30 year loans with voluntary prepayment over 15 year loans-they are more flexible.

In one situation prepaying can reduce your monthly payment. If you are paying PMI then by prepaying enough-to get the loan to value ratio down to roughly 80%-you can eliminate the need and expense of PMI. Again you will have to follow up with your lender to make sure they will drop the PMI. That will cut your monthly payment.
 
MrDudeMan

MrDudeMan

Lifer
Jan 15, 2001
15,069
94
91
The answers here are actually wrong in some cases. Some banks will reamortize your loan if you drop a large principal payment in your mortgage account. For example, if I make a one time payment to my loan of $10,000 or more, it will be reamortized which will change the monthly payment without needing to refinance. YMMV depending on the bank, type of loan, and various other factors. I'm using a credit union for a conventional loan in this case. My other house is financed through Chase and they don't offer anything like what I just said as far as I know.

Lastly, you don't need to put 20% down. PMI is calculated by steps of 5% regarding the down payment. E.g. (I'm making these numbers up, but the idea is right):

0.00 - 4.90% = $200/mo
5.00 - 9.90% = $170/mo
10.0 - 14.9% = $130/mo
15.0 - 19.9% = $80/mo

In my case, it was worthwhile for me to pay only 15% because I wanted to have enough liquidity and my house was pretty expensive. I ended up paying $79/mo for PMI, which is basically noise, and to avoid that fee I would have had to put down an additional $30k. Given my aggressive loan, it paid to 20% equity in 18 months, which was worth it to me to not sink a ton of 'extra' money into the mortgage. Yeah, it's throwaway money, but I ended up needing some of that $30k so it was good that I decided to do it that way. My point is there's not one right way to do this, but don't think I'm suggesting that every way is correct because that's not true either.
 
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Z

Zee

Diamond Member
Nov 27, 1999
5,171
3
76
RearAdmiral said:
Curious. Did you have to pay any sort of additional closing cost, or did they just jack up your rate? That is typically how I have seen this no PMI thing work before. I've never seen a true no PMI where you aren't paying for it one way or another.
Click to expand...

i think all military related loans have such perks. maybe they are subsidized?
 
purbeast0

purbeast0

No Lifer
Sep 13, 2001
53,165
6,038
126
RearAdmiral said:
Curious. Did you have to pay any sort of additional closing cost, or did they just jack up your rate? That is typically how I have seen this no PMI thing work before. I've never seen a true no PMI where you aren't paying for it one way or another.
Click to expand...

no additional closing costs or anything. we did get a better rate putting 5% down than if we had put 0% down though. i don't think the rate was anything extra higher for the time for a first time home buyer either. i believe it was 4.625% but i am not 100% sure.

i've never seen no PMI in general outside of the navy federal loans, which is why we went with that. no way we were going to get 20% down and it would be pointless considering we can afford it just fine with our current payment (and am actually putting extra in every payment too).
 
RearAdmiral

RearAdmiral

Platinum Member
Jun 24, 2004
2,276
128
106
purbeast0 said:
no additional closing costs or anything. we did get a better rate putting 5% down than if we had put 0% down though. i don't think the rate was anything extra higher for the time for a first time home buyer either. i believe it was 4.625% but i am not 100% sure.

i've never seen no PMI in general outside of the navy federal loans, which is why we went with that. no way we were going to get 20% down and it would be pointless considering we can afford it just fine with our current payment (and am actually putting extra in every payment too).
Click to expand...

Is that your APR? That's a pretty darn good APR with 5% and no PMI. Good job!
 
purbeast0

purbeast0

No Lifer
Sep 13, 2001
53,165
6,038
126
RearAdmiral said:
Okay, that's the only place a gotcha might be hiding. I'd be interested to see how they differ.
Click to expand...

actually that might have been the APR. i just checked my mortgage stuff and the interest rate is 3.875% so i'm not sure where i got that other number from, maybe it was the APR.
 
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